Mexico president girds for key address ringed by problems, riding high in polls

MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador gears up for his first state of the union address on Sunday with the economy flirting with recession, murders reaching record levels - and his popularity riding high.

After taking office in December vowing to revive a sluggish economy and bring down violence, the veteran leftist Lopez Obrador has so far fallen short of the goals he set himself.

But he has firmly installed himself at the center of public consciousness with two-hour daily news conferences and rallies around Mexico which he uses to discredit adversaries and blame previous governments for the country's woes.

Throughout, he has rammed home a message that the chronic inequality, gang violence and tepid growth afflicting Mexico are the product of decades of government by a corrupt political and economic elite still trying to resist his promise of change.

"We're going to put a stop to corruption and the luxuries of government," he told a crowd in the northern town of Concepcion del Oro this month. "These show-off, arrogant politicians, surrounded by bodyguards, they're heading to a faraway place, like when you hit balls for a home run over the fence."

For now, problems that dogged the previous administration have only continued to grow.

Homicides hit record levels in 2018. During the first eight months of Lopez Obrador's administration, 19,642 murder investigations were opened, up more than 4% from the same period a year earlier, according to official data.

This week 28 people died in an arson attack on a bar in the southern port of Coatzacoalcos, one of the worst mass killings of the administration.

Lopez Obrador has acknowledged his government must do more to improve security, though he is adamant the new National Guard he established will contain the violence.

Meanwhile, the economy posted no growth in the second quarter and shrank by 0.3% in the January-March period.

Fernando Belaunzaran, a leader of the center-left Party of the Democratic Revolution and staunch critic of Lopez Obrador, said the president's permanent campaigning and control of the news agenda had kept problems at bay.

"Even though his rhetoric is very simplistic, it's effective," he said. "People are still giving him the benefit of the doubt. But a time will come when reality bites."

Lopez Obrador has not had it all his own way.

Frustrations about his management boiled over last month when Finance Minister Carlos Urzua quit, accusing the administration of crafting policy without enough forethought and of foisting unqualified officials on him.

UNCERTAINTY

Mexico has already had to contend with the risk of economic disruption from abroad since U.S. President Donald Trump in May threatened to slap tariffs on all Mexican goods if the country did not curb U.S.-bound migration from Central America.

Lopez Obrador responded by sending thousands of National Guardsmen to Mexico's borders and has accepted thousands of asylum seekers while they await court hearings in the United States.

His moves have placated Trump, who is deeply unpopular in Mexico. But polls suggest a growing hostility toward migrants in Mexico. Meanwhile, some officials in Lopez Obrador's administration are unhappy with his accommodation of Trump.

Lopez Obrador insists he wants no dispute with the United States and the episode has done little to dent his popularity.

An Aug. 20-24 survey of 1,000 Mexicans for newspaper El Universal showed Lopez Obrador had the support of 69% of respondents, slightly up on the results of a June poll.

Nevertheless, the survey showed that more than 54% of respondents believed the president was not coping with Mexico's problems. Only 38% took the opposite view.

The poll did show strong support for his tough talk on tackling corruption, and Lopez Obrador has started to generate some expectations that he is serious about it.

Prosecutors have launched high-profile investigations against two senior officials from the prior administration centering on suspected misuse of public funds. One of them is now in custody pending trial.

The graft cases, along with public auctions of impounded assets and luxury aircraft and vehicles from the last government have helped keep attention away from less positive news.

On top of that, the president has sought to trumpet success in wringing concessions from the private sector.

This week Lopez Obrador said he had saved taxpayers $4.5 billion by making companies renegotiate several natural gas pipeline contracts agreed by the last government.

Not everyone is impressed.

"It's a bad precedent," said Andres Rozental, a business consultant and former Mexican diplomat, referring to the pipeline deal. "And it raises the level of uncertainty."